GKN brands Melrose a novice operator as bid battle intensifies
GKN branded Melrose Industries a novice operator with no plan, in the latest round of accusations between the companies locked in a hostile bid battle.
The FTSE 100 engineering company published a series of rebuttals to what it described as misleading statements made by Melrose, which is trying to buy GKN against the will of GKN’s board.
GKN said Melrose was “a novice in automotive” with little experience in aerospace and no wider plan. It rejected claims made by Melrose about GKN’s research and development spending and pension contributions and the proposed sale of GKN’s automotive business.
Melrose and GKN have engaged in a war of words since GKN rejected the turnaround company’s £7bn approach on 12 January. Melrose lodged a final bid of £8.1bn on 12 March and shareholders have until 29 March to vote on the offer.
GKN has agreed to sell its automotive division to Dana Inc of the US as an alternative to Melrose’s claim that it will run the business better. Melrose has said the deal is hasty and not thought through but GKN said it had considered a combination with Dana for a number of years and that Dana approached it in late 2017.
GKN also said:
- Melrose is a “novice operator” in automotive and has minimal experience in aerospace, an industry it has been out of since 2007.
- GKN had not adopted many of Melrose’s ideas for its aerospace business and had already identified changes in 2017.
- GKN’s research and development spending in 2017 was £262m compared with £230m by Melrose over five years.
- GKN has not reduced annual contributions to pension schemes. Contributions rose from £100m in 2015 to £121m in 2016 and £344m in 2017.
Anne Stevens, GKN’s chief executive, said: "In scale and nature, GKN is completely different from any business Melrose has ever bought. Melrose lacks the knowledge and experience to manage GKN successfully and has absolutely no plan for the business. Melrose is the high-risk choice. Melrose's offer does not come close to reflecting GKN's true value and I urge shareholders to reject it."